Role of a Merchant Banker:

1. Capital Raising:
Merchant bankers help companies raise capital by advising on the most appropriate method of fundraising, such as issuing shares, debentures, or obtaining loans. They assist in the entire process from preparing the prospectus to listing on the stock exchange.

2. Underwriting:
Merchant bankers act as underwriters for new securities issued by companies. They guarantee the purchase of securities that are not fully subscribed by investors, thereby reducing the risk for the issuing company.

3. Mergers and Acquisitions:
Merchant bankers play a crucial role in facilitating mergers and acquisitions by advising companies on valuation, negotiation, structuring deals, and assisting in the due diligence process. They help in identifying potential targets and strategic partners.

4. Advisory Services:
Merchant bankers provide strategic advice to companies on various financial matters, including restructuring, diversification, and expansion. They help businesses make informed decisions by conducting feasibility studies and market research.

5. Risk Management:
Merchant bankers help companies manage financial risks by offering hedging strategies, such as derivatives, to protect against market fluctuations. They assess and mitigate risks associated with investments and transactions.

6. Regulatory Compliance:
Merchant bankers ensure that companies comply with regulatory requirements and guidelines set by regulatory authorities. They help in obtaining necessary approvals, licenses, and registrations for financial transactions.
Overall, merchant bankers play a crucial role in the financial ecosystem by facilitating capital formation, providing advisory services, managing risks, and ensuring regulatory compliance for companies looking to raise capital or engage in strategic transactions.